A revised formula for calculating the expected annualized rate of return of graded funds;
The implied expected annualized rate of return for permanent Class A correction = expected annualized interest rate in the next period /(A transaction price -(A net value-1)+ fixed discounted remaining years × (expected annualized interest rate in the next period-expected annualized interest rate in the current period))
The significance of grading a to correct the expected annualized expected rate of return;
As for the implied expected annualized rate of return of Grade A, the existing research system regards it as a kind of perpetual floating interest rate debt with fixed income, and calculates its expected annualized rate of return at maturity, which represents the expected annualized rate of return held for a long time.
Because the discount clause and the same rise and fall clause of graded funds will make Party A investors recover most of the cash flow in advance, the impact of discount clause or the same rise and fall on pricing can not be ignored. It is unreasonable to price Grade A as perpetual debt, especially for Grade A which is close to triggering the discount, there may be a big loss in the short term, but the implied expected annualized expected rate of return still exceeds 5%. It is necessary to modify the implied expected annualized expected rate of return.
After revising the implied expected annualized expected rate of return, the revision of A with a large premium implies that the expected annualized expected rate of return is negative, which is more in line with reality, while the revision of A with a discount implies that the expected annualized expected rate of return has increased, reflecting that the discounted cash flow recovered in advance may have a higher actual expected annualized expected rate of return.
Of course, in the result of the revised implied expected annualized expected return, for A whose discount time is too short, the revised implied expected annualized expected return is far from the traditional calculated implied expected return, and it is highly sensitive to the redemption price, which reflects that the expected annualized expected return of A with short-term discount has great uncertainty.
In addition to the influence of short discount time on the revision of implied expected annualized rate of return, investors also need to pay attention to the revision of varieties with large (or negative) implied expected annualized rate of return. These varieties also need to consider the expected annualized rate of return of reinvestment, especially the reinvestment pressure of large cash flow brought by discount (reinvestment will increase the actual expected annualized rate of return, making it higher than the revised implied expected annualized rate of return).